January 27th, 2011

Economics, & Finance

Chavez again threatens Spain bank unit with takeover

Venezuela's President Hugo Chavez phoned an official at Spanish bank BBVA's local unit live on TV on Wednesday to threaten it with nationalization if mortgage seekers were not better served. The socialist president has frequently threatened to take over any banks that stand in the way of financing for much needed home building in the country, and has singled out BBVA'S Banco Provincial unit in the past. But he upped the ante on Wednesday when, after hearing complaints by would-be homeowners about lack of attention from Provincial, he phoned the official during a televised meeting. (Reuters, 01-26-2011; http://www.reuters.com/article/idUSN2617777220110126)

Commercial Banking sector must grant at least Bs.F15 billion for house construction, half of the amount needed to build the 150,000 housing units promised for this year, warned President Chávez yesterday. (Veneconomy, 01-27-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=24672&idc=2)

Government postponed launch of the Public Securities Exchange Market for next week even though President Chávez had announced it would be launched today. (Veneconomy, 01-26-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=24660&idc=2)

Coca-Cola Femsa Says 11-Day Venezuela Strike Cuts Production

A strike at the main plant of Coca- Cola Femsa SAB’s operations in Venezuela continued into an 11th day today, cutting production by 5.7 million unit cases since it began Jan. 14, the company’s legal director, Rodrigo Anzola, said in a telephone interview from Caracas. (Bloomberg, 01-25-2011; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aQZBsgGdi1Ns)

Chavez Beats AT&T to Cuban Market Over Price Dispute

A pricing dispute between the U.S. and Cuba may have cost American companies including AT&T Inc. and Verizon Communications Inc a foothold in the communist island’s recently opened telecommunications market.

Paris-based Alcatel-Lucent SA on Jan. 22 began laying a $70 million, 1,600-kilometer (1,000-mile) underwater fiber-optic cable between Venezuela and the city of Siboney on Cuba’s southeastern coast. Venezuelan President Hugo Chavez heralded the subsea link as a way to break the half-century-old U.S. “blockade” of Cuba. (Bloomberg, 01-26-2011; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a7KrehRDZscU)

Central government deficit at 4.02 percent of GDP in 2010

Although current revenues in 2010 were above the estimated in the Venezuelan budget, expenditures were higher than expected, but at the end the central government recorded a deficit. According to data provided by the Ministry of Finance, in 2010 the Treasury received current revenues amounting to USD 46.16 billion, while expenditures stood at USD 54.19 billion. Given this gap, economic research firm Ecoanalítica estimated that in 2010 the deficit was 4.02 percent of GDP. However, the government can resort to funds to cope with the deficit. (El Universal, 01-26-2011; http://english.eluniversal.com/2011/01/26/en_eco_esp_central-government-d_26A5049051.shtml)

Jose Khan: China cooperation will boost Venezuela's industrial capacity

The bilateral strategic ties are "very important" to Venezuela, Basic Industry and Mining Minister Jose Khan told Xinhua on Sunday, adding that the joint commissions of the two nations have held nine meetings to design production projects to boost Venezuelan economic development. He said that the plans designed would cover various fundamental areas, such as transportation, agriculture, food production and telecom. "In the case of basic industries, we have been discussing and approving a series of projects which will allow in 2011 the basic industries to recover their production and improve their productiveness," he said. (Global Times, 01-25-2011; http://business.globaltimes.cn/china-economy/2011-01/616311.html)

Commodities

Cadivi authorized over $1.3 billion to the livestock sector in 2010, up 24% from the previous year, informed the foreign currency regulating body in a press release on Monday. (Veneconomy, 01-25-2011;http://www.veneconomy.com/site/index.asp?idt=24624&idc=2&NPag=2&Start=15&aaD=2011&ids=44&Var_Send=1&mmD=01&ddD=25&mmH=01&ddH=26&aaH=2011&Send=Buscar)

Menpet to define geographical area of the joint venture between the Venezuelan Oil Corporation (CVP) and Petropars UK Limited to carry out primary activities at the Dobokubi field, located in the San José de Guanipa, Independencia and Pedro María Freites municipalities in Anzoátegui state once the government transfer its rights (January 25 Gaceta Oficial). (Veneconomy, 01-26-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=24656&idc=4)

International agreements boost agricultural production

Minister of Agriculture Juan Carlos Loyo said that the government forgave a USD 10-million debt to peasants whose crops were destroyed by heavy rains late last year. Producers had been granted loans by the state-run Socialist Agrarian Development Fund (Fondas). (El Universal, 01-26-2011; http://english.eluniversal.com/2011/01/26/en_eco_art_international-agreem_26A5050651.shtml)

Mining has downsized 60 percent since 2009

Venezuelan mining is does not escape the downward trend in production that has afflicted most other sectors of the Venezuelan economy. Based on the numbers provided by the Central Bank of Venezuela (BCV), mining has declined 60 percent over the past couple of years. In the opinion of the president of Venezuela's Mining Chamber (Camiven), Luis Rojas Machado, many factors play a role in such performance. The salient one is "an inexistent mining policy in the country; lack of information and dialogue." Local mining "lowered 60 percent of its Gross Domestic Product (GDP) in 2009-2010." Particularly, "it fell 39 percent in 2009 and in 2010 the drop was of 12 percent." (El Universal, 01-27-2011; http://english.eluniversal.com/2011/01/27/en_eco_esp_mining-has-downsized_27A5054933.shtml)

Venezuelan steelmakers call for measures to resuscitate industry sector

BNamericas reported that after closing 2010 with the lowest production levels in the history of Venezuelan steelmaking, sector executives have asked the government to report on what is being done to reverse the situation. Mr. Eduardo Garmendia steel sector executive told BNamericas that "a group of business people made the request because Venezuela's steel sector had a briquette manufacturing capacity that made it the largest briquette producer in the world and currently the sector isn't even at 30% of its capacity." Mr. Garmendia, who is also the former president of the country's mining and metallurgical industry association AIMM, said that the decline was caused by the drop in iron ore production, which is at 50% of what it was in previous years. (VHeadline, http://www.vheadline.com/readnews.asp?id=100517)

Logistics & Transport

Ninety percent of Venezuelan roads in terrible conditions

Based on a technical survey of the Venezuelan Engineers' Association (CIV), 70 percent of roads are in terrible conditions after the heavy rainfalls recorded in late 2010. Today, 90 percent of roads are seriously damaged, thus restricting traffic and causing casualties. (El Universal, 01-25-2011; http://english.eluniversal.com/2011/01/25/en_eco_esp_ninety-percent-of-ve_25A5036651.shtml)

Politics

President Chávez announced another decree-law and a new Socialist Mission during a visit to the Social Property Unit La Productora in Ospino, Portuguesa state. Even though he did not detail the names or areas of influence, it is expected they will both deal with the agro-producing sector. (Veneconomy, 01-25-2011; http://www.veneconomy.com/site/index.asp?idt=24637&idc=1&ids=44&Var_Send=1&mmD=01&ddD=25&mmH=01&aaD=2011&ddH=26&aaH=2011&Send=Buscar)

President Chávez ready to work with dissenting state governors

During his visit to a socialist property unit located in Portuguesa state, Venezuelan President Hugo Chávez claimed to be ready to support opposition state governors "as long as they make proposals." (El Universal, 01-25-2011; http://english.eluniversal.com/2011/01/25/en_pol_art_president-chavez-rea_25A5043293.shtml)

President Chavez welcomes Uruguay's Mujica for bilateral meeting

On Thursday arrived at the Miraflores Presidential Palace, Caracas, the president of the Oriental Republic of Uruguay Jose Mujica to hold a bilateral meeting with Venezuelan President Hugo Chavez. The two presidents will hold a meeting of work with the aim to sign a series of bilateral cooperation accords in matters of food and energy. (AVN, 01-27-2011; http://www.avn.info.ve/node/40266)

Uruguay supports candidacy of Ali Rodriguez to Unasur Secretariat

During an exclusive interview with Telesur, the President of Uruguay Jose "Pepe" Mujica said on Wednesday that his country would support the candidacy of the Venezuelan Alí Rodríguez Araque to the General Secretariat of the Union of South American Nations (UNASUR). Mujica arrived yesterday in Venezuela in his second official visit to strengthen bilateral ties, the Ministry of People’s Power for Foreign Affairs Nicolas Maduro said. (AVN, 01-27-2011; http://www.avn.info.ve/node/40246)

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.